You’re home hanging out with friends or family when suddenly, your mobile phone rings. You look at it but don’t recognize the number on your caller ID. You take a chance and answer anyway. On the other end of the line is a debt collector. After introducing themselves, the caller advises you that they are trying to collect on a debt. They tell you the call is being recorded, and warn you that anything you say will be used for the purpose of debt collection.
You hesitate. What are you supposed to do? How you respond in this situation depends upon several things:
Is this call for you? Did one of your bills go into collection?
Are they calling for someone else you don’t know?
Is this a phone call for a relative or significant other?
This article is about what do when you are contacted by a debt collector. I’m not only going to cover what to do when you get those kinds of calls, I’m also going to cover what to do when a debt collector either calls you or writes you letters. These guidelines will greatly facilitate helping you formulate a proper response. But before I give specific advice, I’m going to cover a couple of general points.
The Mini-Miranda Warning. Before going over your options, remember this: anything you say can be used against you by the debt collector. This is why the courts have required debt collectors to provide a “Mini-Miranda” warning before they talk to you, i.e., telling you that anything you say can and will be used against you. The worst thing you can do is promise to repay a debt when speaking on the phone, even if you owed it. For example, telling a debt collector on the phone that you will agree to the debt, they will later argue, created a legal obligation to follow through and pay it, even if the legal time limit to collect on the debt has long since expired. With that in mind, let’s discuss some of things that I recommend you do in these situations.
Federal and State Laws Protect You. Even if the debt belongs to you, state and federal laws have been enacted that provide consumers with protection by regulating the conduct and behavior of debt collectors. In other words, debt collectors have to follow proper protocol when attempting to collect a debt. If they follow the law throughout the debt collection process, their collection process will go smoothly. If they do not follow the law, the consumer can collect damages: putative damages, actual damages, attorneys fees and costs.
There are three categories of federal laws that protect you, in one way or another, from the practices and methods used by debt collectors. They are the Fair Debt Collection Practices Act (“FDCPA), the Telephone Consumer Protection Act (“TCPA”), and the Fair Credit Reporting Act (“FCRA”). Let’s talk about each one briefly, and I’ll discuss them in the context of the examples below.
FDCPA. These are the main statutes that govern the conduct of debt collectors. It’s codified as 15 U.S.C. § 1692 et seq. It provides that debt collectors (1) cannot use false or misleading information to collect a debt, (2) cannot call the consumer before or after certain time frames, and (3) must send a collection letter notifying the consumer of their right to verify the debt. These are three of the most common protections afforded by the FDCPA.
Some states have passed laws that parallel or add greater protections than those provided by federal law. For example, California passed the Rosenthal Act, adding further protections to California citizens.
TCPA. Debt collectors who call your mobile phone using an automated telephone dialing system (“ATDS”), something we call “robocalls,” must have your express written consent to call or text you. If they did not obtain your consent directly, they can sometimes obtain it indirectly from the original creditor. Otherwise, it could be a violation of the TCPA, and by statute they may be required to pay you from $500 up to $1,500 per violation.
FCRA. Debt collectors are notorious for reporting your unpaid bills to the consumer reporting agencies (Equifax, Experian, and Transition), also referred to as CRAs. Debt collectors know that by reporting these debts to the CRAs, it can dramatically drop your credit score. By paying off these debts, they should update the information, allowing your credit score to begin to rise once again. When you dispute an item to the CRAs, the debt collectors who are furnishers of this information must conduct a reasonable investigation into the matter. If they don’t then they may have violated the Fair Credit Reporting Act or FCRA. which can assess actual, putative, and punitive damages. They can also be required to pay your attorney's fees and costs.
Now that we have covered some of the more important federal laws protecting consumers, let’s see how these laws can be used in the various scenarios below.
Scenario One: The Debt Belongs to You. In this scenario, you are the person in fact who acquired the debt. It’s not a mistaken call. In some cases, the debt may be too old for them to sue, but the law does not prevent them from contacting you past the statute of limitations.
How to handle the caller. As noted above, do not agree to pay the debt. The debt may already be time-barred (i.e., past the statute of limitations). Take down the information and tell them you would like to handle the communications in writing. Politely ask them to stop calling, and hang up.
The debt collector is required to notify you in writing within five days of their initial communication. If they don't then they may be in violation of the FDCPA
What to do if the caller keeps calling. If the caller does not take no for an answer, and continues to call, keep a log of all answered and unanswered calls. All of these calls will be in violation of the TCPA if made after you told them to stop calling. I don’t normally see debt collectors texting, but texting is also against the law without your permission.
Make a written request for validation of the debt. After you receive a letter from the debt collector, it should say you have 30 days to request validation. In my opinion, you should always, always write the letter requesting verification. Once you send them a letter, they have 30 days to respond, during which time they must cease collection efforts. If they don’t send validation, and they continue to try and collect then it’s a violation of the FDCPA. Neither they nor anyone else can continue collection efforts until they verify the debt with supporting documentation. Find out the day of last payment. Because debts have a a statute of limitations, find out the date of the last payment. Even if you owed the debt, if it’s past the statute of limitations they cannot force you to pay unless you agree to pay or you send them a payment, which may restart the clock. Again, do not make any payments or agree to pay on any debt that is time-barred. If you do, it may renew the obligation.
How to handle the debt collector who calls you at work. Debt collectors can call you at work unless you advise them that you cannot take calls at work at the risk of losing your job. Once you inform them, they are required to stop calling.
Calling your friends, family, co-employee or employer. If debt collectors call people you know, they have have a claim for violations of the TCPA.
Scenario Two: The Debt Does Not Belong to You. If you don’t owe the debt, it’s likely the debt collector never had permission to call you in the first place. If so, then after the first call, the debt collector may be in violation of the TCPA if the calls are made using an automated telephone dialing system. If could be a violation of the FDCPA for them to continue attempting to collect on a debt using false, erroneous, or misleading information. Check your credit reports and see whether they are reporting the debt on your credit report. If so, write a letter to each of the reporting CRAs, and if it isn’t removed, the FCRA may have been violated.
Scenario Three: The Debt Belongs to Family or Friend—or you are an authorized user. Authorized users are not legally obligated in the State of Nevada for a debt on a credit card. Authorized users are not co-signers or guarantors on a debt. Sometimes you will get a call from a debt collector claiming that you are responsible. Ask them to contact your friend or family member directly. Let your friends or family know about the call. Do not make any other statements to the debt collector. If they threaten you, it may be a violation of the FDCPA.
Let’s look more closely at the laws that protect you from abusive debt collectors, namely the FDCPA, the FCRA, and the TCPA. The statements below come directly from the statutes, or in the case of the TCPA, is the law quoted and explained by the United States Supreme Court. Once you read through this, I’ll summarize:
The Fair Debt Collection Practices Act (FDCPA)
Harassment and Abuse. “A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt.” This includes “the use of obscene or profane language or language the natural consequence of which is to abuse the hearer or reader” and “Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.” 15 U.S.C. § 1692d.
False or Misleading Misrepresentations. “A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” This statute includes several examples, such as “communicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.” I believe this example is what to use for when a debt collector reports a debt on your credit report that does not belong to you. See 15 U.S.C. § 1692e(8).
Right to Validation of Debt. “If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment[.]” This is a portion of 15 U.S.C. § 1692g(b).
The Fair Credit Reporting Act (FCRA)
Reasonable Investigation. “After receiving notice… of a dispute…the [furnisher] shall…conduct an investigation with respect to the disputed information[.] [I]f the investigation finds that the information is incomplete or inaccurate, [the furnisher must report those results [to the CRAs,” and they have to modify, delete or block the information. See 15 U.S.C. §1681s-2(b). Although the word “reasonable” does not appear before the word “investigation,” two appellate courts have held that the investigation implies that it must be reasonable. The first case is Johnson v. MBNA, 357 F.3d 426 (4th Cir. 2004). The second case is the case I was privileged to argue before the 11th Circuit Court of Appeals in May of 2016, Teri Hinkle v. Midland Credit Management, 2016 WL 3672112 (11th Cir. 2016).
The Telephone Consumer Reporting Act (TCPA)
The Telephone Consumer Protection Act (TCPA or Act) 48 Stat. 1064, 47 U. S. C. § 227(b)(1)(A)(iii), prohibits any person, absent the prior express consent of a telephone- call recipient, from “mak[ing] any call . . . using any automatic telephone dialing system . . . to any telephone number assigned to a paging service [or] cellular telephone service.” A text message to a cellular telephone, it is undisputed, qualifies as a “call” within the compass of § 227(b)(1)(A)(iii). 768 F. 3d 871, 874 (CA9 2014). For damages occasioned by conduct violating the TCPA, § 227(b)(3) authorizes a private right of action. A plaintiff successful in such an action may recover her “actual monetary loss” or $500 for each violation, “whichever is greater.” Damages may be trebled if “the defendant willfully or knowingly violated” the Act. See 47 U.S.C. § 227; Campbell-Ewald v. Gomez, 577 U.S. ____ (2016).
At this point, if your eyes have not already glazed over, let me try and summarize what you should do “when a stranger calls,” and it’s a debt collector:
First, if the call was made to your mobile phone, ask yourself, “Did I give this company or the creditor permission to call my cell phone?” If not, you may be on the cusp of catching the caller committing a violation of the TCPA, and you should keep a log of every time they call you;
Second, tell them you do not wish to receive any more calls, and ask them to communicate with you only through the mail. You are not required to give them your address;
Third, do not admit to owing the debt; you usually don’t yet have enough information to know whether you are legally entitled to pay the amount they are alleging;
Fourth, never agree with the caller on the phone to pay it. If you know it’s not your debt, orally dispute it;
Fifth, they must send you a letter in the mail within 5 days; when you get a letter in the mail concerning the debt, be sure to write the debt collector and request validation of the debt;
Sixth, look out for any violations of the fair debt collection practice laws, such as harassment, use of false or misleading information, and improper tactics;
Seventh, write dispute letter to the CRAs and the debt collector if any of the information about the debt was incorrectly reported to the CRAs that show up on your credit reports.
Following these steps will go a long way towards protecting your rights.
Firm Wins Appeal on Issue of Reasonable Investigation under FCRA
July 12, 2016
Oral Argument at 11th Circuit Court of Appeals May 17, 2016